PROBLEMS AND PROSPECTS OF PERSONAL INCOME TAX

PROBLEMS AND PROSPECTS OF PERSONAL INCOME TAX IN NIGERIA(A CASE STUDY OF OWERRI WEST LOCAL GOVERNMENT AREA, IMO STATE)

TABLE OF CONTENT

Title page………………………………………………………………………………….i

Certification………………………………………………………………………………ii

Dedication………………………………………………………………………………..iii

Acknowledgment……………………………………………………………………..iv

Table of Content……………………………………………………………………….v

Abstract…………………………………………………………………………………….vi

Chapter one

Introduction………………………………………………………………………..………….1

Background of the Study …………………………………………………….,..……….1

Statement Of Problem ………………………………………………………….………….1

Research Question / Hypothesis …………………………………………..………….5

ABSTRACT

This Paper examines the problems associated with the Assessment and Administration of Personal Income Tax on Motorcycle riders in (UMUGUMA)Owerri West LGA Metropolis. The study uses Primary data involving face-to-face interviews and observations, while descriptive survey was used to analyze the data. The paper utilizes the stratified random sampling technique in selecting 28 units out of the 294 units in the Metropolis. One hundred and fifty (150) Umuguma were randomly selected, observed and interviewed using the interview and uncontrolled/unstructured observation method. The main findings of the research are that, tax officials lack adequate training and experience in carrying out their assignment. Similarly, shortage of staff, payment default on Direct Assessment Tax System (DATS), insufficient financial resources available to the tax authority and lack of Political will on the part of Government in enforcing the tax laws were also found to affect the revenue generation drive of the State. The paper also finds that Motor cycle (Umuguma) riders do not pay any form of tax or levy to the State Government, but have very high expectations from it, in the provision of infrastructural facilities like Roads, Bridges, Hospitals, Motor cycle Loans etc. The paper recommends that the State Government in conjunction with the tax authority should embark on proper recruitment, training and development of staff, provide good remuneration packages to tax officials, provision of adequate working facilities, and embark on massive enlightenment of the taxpayers on the importance of tax payment. This, it is believed, will enhance the revenue generation of the State, by bringing in hitherto none tax payers into the tax-paying circle. Finally, the paper strongly recommends a form of Personal Income Tax on Motor cycle (Umuguma) riders, as it is a promising Industry that could assist the State in terms of revenue generation.

CHAPTER ONE

1.0 INTRODUCTION

BACKGROUND OF THE STUDY

Tax is an important factor in economic planning and development of a nation and I is an important agent of social change, (Ola 1985:109). Tax according to Agysi (1983:174) the transfer of resources from private sector to the public sector in order to accomplish some of the nations economic and social goals. Furthermore, tax is a compulsory levy imposed on the payer by a legal authority or recipient public authority. Throughout the history of mankind, the right to raise tax has been one of the principal features of political authority. Tax is an instrument of fiscal policy, which plays a leading role in every organized society irrespective of the political or constitutional structure. Once a society becomes stabilized, civilized or law abiding the function of government becomes enormous resulting in heavy expenditure and necessitating tax payment by its subjects. For a developing country like Nigeria, the primary economic goal is to increase the rate of economic growth and hence the per capital income which will lead to higher standard of living Three main method of financing economic expenditure in most developing economics include taxes and other current receipts such as the profit of public enterprises, loans and grants. Of these sources, tax is perhaps the most important since the level of government expenditure is to a great extent dependent on the ability of the tax system to place the required revenue at the disposal of government. Hence, Samuelson (1980:92) wrote that “in deciding to tax people, the people are really deciding how resources needed for social wants shall be taken from all various families and from the enterprises they own and made available for the provision of social goals and services”. Again since market system proves inadequate for ensuring stable price and steady growth, tax has to be used to bring about employment, stable price and steady growth. In addition, tax is meant to ensure, at times, a transfer of resources from the hand of the private to public or government for investment, modification of patterns of investment and mitigating economic inequalities. Allas, these aims are far from being achieved in Nigerian society. The tax system is failing in almost all the above respect. Therefore, there must be crucial problems militating against efficient and effective tax administration in Nigeria.

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